At a time where everything is changing, we are constantly hearing about innovation and transformation. These terms are often used interchangeably, and they both imply change, but do they mean the same thing? Thinking about the most commonly cited example, are taxi companies innovating now that they are offering a different experience to their customers? Or are they transforming because of the innovation brought through to the industry by Uber? Is the hospitality sector innovating or are they simply responding to the disruption that Airbnb has brought in? Other examples include Amazon delivery services and the disruption to the postal service; the rise of car clubs and impact on traditional car rental companies; and many more.
Is innovation what is first introduced by one provider, while transformation is what the incumbents have to do to catch up? This would be pretty much a market competitiveness perspective to the matter.
But if we look at it from an organization perspective, is innovation about offering a new service or product to the consumer? While transformation is about the way the organization works to deliver the product or service? Do we innovate the customer facing offering and transform internally?
I looked up these two terms in various dictionaries and online resources and found the following:
Innovation is defined as a new idea, more effective device or process. Innovation can be viewed as the application of better solutions that meet new requirements, inarticulated needs, or existing market needs. This is accomplished through more effective products, processes, services, technologies, or ideas that are readily available to markets, governments and society. The term innovation can be defined as something original and more effective and, as a consequence, new, that “breaks into” the market or society.
While a novel device is often described as an innovation, in economics, management science, and other fields of practice and analysis innovation is generally considered to be a process that brings together various novel ideas in a way that they have an impact on society. [Source: Wikipedia]
Another definition of Innovation is the process of translating an idea or invention into a good or service that creates value or for which customers will pay. To be called an innovation, an idea must be replicable at an economical cost and must satisfy a specific need. Innovation is synonymous with risk-taking and organizations that create revolutionary products or technologies take on the greatest risk because they create new markets. [Source: http://www.businessdictionary.com/definition/innovation.html]
Transformation on the other hand is described in the Oxford Dictionaries as a complete change in somebody/something, a marked change in form, nature, or appearance.
In an organizational context, the Business Dictionary defines it as a process of profound and radical change that orients an organization in a new direction and takes it to an entirely different level of effectiveness. Unlike ‘turnaround’ (which implies incremental progress on the same plane) transformation implies a basic change of character and little or no resemblance with the past configuration or structure. [Source: http://www.businessdictionary.com/definition/transformation.html#ixzz3pwzs1mph]
I view innovation as a new product or service that disrupts existing markets and offerings, with the end result being the transformation of those industries and businesses, both internally and externally, whereby incumbents have to transform their product or service to remain competitive, while at the same time they have to transform how they operate to deliver to the new standards.
I am curious to hear what you think about these factors, what you would consider an innovation vs a transformation. Share some examples of what you have experienced within your own business or as a consumer yourself, and let the debate start.
November 3, 2015 by Adele Ghantous